After termination or expiration of a Big Apple Bagels franchise, what is the geographic scope of the non-competition covenant?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Provision in Franchise Agreement (unless otherwise specified) | Summary |
|---|---|---|
| a. Length of the franchise | Paragraph 2.a. | 10 years |
| term | ||
| b .Renewal or extension of | Paragraph 2.b. | If you are in good standing, you can renew on the then current terms |
| the term | ||
| c. Requirements for Franchisee to renew or extend | Paragraph 2.b. | Pay renewal fee of $2,500, maintain premises or secure substitute premises, remodel, sign new agreement and other documents and sign release, and agree to upgrade to then-current standards of decor, equipment, and product offerings. The renewal agreement may contain materially different terms and conditions than your original contract, but the royalty fee will not be greater than the royalty fee that we then impose on similarly-situated renewing franchisees |
| d. Termination by | Section 15 | Breach by BAB, you in compliance. Additionally, you may terminate |
| Franchisee | the agreement under any grounds permitted by law. | |
| e. Termination by | Not Applicable | BAB cannot terminate your Franchise Agreement without cause |
| Franchisor without cause | ||
| f. Termination by | Section 16 | BAB can terminate only if you commit any 1 of several listed |
| Franchisor with cause | violations | |
| g. "Cause" defined – curable faults | Section 16 | You have 10 days for monetary defaults and failure to maintain required insurance, and 30 days for all defaults not listed in Paragraph 16.a. |
| h. "Cause" defined – non- curable defaults | Section 16 | Failure to submit site within 90 days, failure to open Store in 4 months of possession, failure to complete initial training, abandonment, conviction of felony, unauthorized transfers, unauthorized use or disclosure of confidential information or BAGELS Operations Manual, unauthorized use of Marks, creation of a threat to public health or safety, repeated defaults (even if cured), unapproved transfer upon your death or permanent incapacity, failure to comply with covenants in Paragraph 9.f; termination of other agreement between BAB and you. |
| i. Franchisee’s obligations on termination/ nonrenewal | Section 17 t | Franchise Agreement: Pay outstanding amounts, complete de- identification, return confidential information, covenant not to compete, continuing obligations, BAB option to purchase. |
| j. Assignment of contract | Paragraph 14.a. | No restrictions on BAB's right to assign |
| by Franchisor | ||
| k. "Transfer" by Franchisee | Paragraph 14.b | Includes transfer of any interest in Franchise Agreement, assets or |
| – definition | ownership change in you | |
| Provision | Provision in Franchise Agreement (unless otherwise specified) | Summary |
| l. Franchisor's approval of | Paragraph 14.c. | Franchise Agreement: BAB has right to approve all transfers, but will |
| transfer by Franchisee | not unreasonably withhold consent. | |
| m. Conditions for Franchisor's approval of transfer | Paragraph 14.b.,14.c. | Transferee qualifies, all obligations assumed by transferee, all amounts due BAB are paid, transferee completes training, transfer fee paid, general release signed, you agree to guarantee performance and obligations of transferee, transferee signs, at BAB's sole discretion, either: (a) BAB's assignment and assumption agreement or (b) BAB's then-current Franchise Agreement, which may contain materially different terms than your Franchise Agreement |
| n. Franchisor's right of first refusal to acquire Franchisee’s business | Paragraph 14.e. | BAB can match any offer for your business or an ownership interest in you |
| o. Franchisor's option to | Paragraph 17.f. | BAB can purchase tangible assets, assignment of all licenses and |
| purchase Franchisee’s | permits, on termination or expiration for the formula price described in | |
| business | the Franchise Agreement | |
| p. Death or disability or | Paragraph 14.c. | Franchise or ownership interest in you must be assigned to approved |
| Franchisee | buyer within 6 months | |
| q. Non-competition | Paragraph 9.f. | No involvement in competing business anywhere |
| covenants during the term | ||
| of the franchise | ||
| r. Non-competition covenants after the franchise is terminated or expires | Paragraph 17.d. | No competing business for 2 years at the Store location or within 10 miles of your Store or any other BAGELS Store or My Favorite Muffin Store (same restrictions after assignment) |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 69–75)
What This Means (2025 FDD)
According to Big Apple Bagels's 2025 Franchise Disclosure Document, the non-competition covenant after the franchise is terminated or expires restricts a franchisee from engaging in a competing business for two years. This restriction applies at the Store location or within 10 miles of your Store or any other BAGELS Store or My Favorite Muffin Store. These same restrictions apply after assignment of the franchise.
This means that upon termination or expiration of the franchise agreement, a former Big Apple Bagels franchisee cannot operate or be involved in a competing business within the specified geographic area for the two-year duration. The inclusion of "My Favorite Muffin Store" in the non-compete clause suggests an affiliation between the two brands, further broadening the scope of the restriction.
Non-compete clauses are common in franchising to protect the brand's market share and confidential information. The geographic scope described in the Big Apple Bagels FDD appears fairly standard, but prospective franchisees should carefully evaluate whether these restrictions would unduly limit their future business opportunities should they decide to leave the system. Franchisees should also consider the density of Big Apple Bagels and My Favorite Muffin locations in their area, as this will affect the practical scope of the non-compete.